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THE K-12 DILEMMA: WHAT CAN BE DONE?
Joel Klein, at the frontier of schools reform in New York, urges CEOs to lobby Washington on behalf of public education.
By Paul Rogers

As U.S. companies struggle to compete in the global marketplace, many find themselves at a fundamental disadvantage: America’s pipeline of young, well-educated workers pales in comparison with those of other nations. Simply put, the country’s K-12 public education system fails to measure up. Inner-city schools (with a few notable exceptions) are languishing. It’s no surprise that high-skilled jobs are migrating overseas.

With the baby boomers nearing retirement and countries such as India and China churning out engineering and science graduates by the tens of thousands, the problem, if unresolved, will only deepen. In the face of this, numerous efforts are under way to reform the nation’s schools, in many cases aided by CEOs. “Other than global security, I don’t think there’s a more important issue facing our nation—and I don’t think as a nation we’re remotely serious enough about the issue,” Joel Klein, chancellor of the New York City schools, told chief executives at a roundtable discussion. “The business community,” he added, “has got to reprioritize this issue, or America’s position globally is going to be significantly in peril.”

It was this passion that prompted Klein to leave a distinguished career in law and business—highlights of which included leading the Justice Department’s landmark antitrust case against Microsoft and serving as CEO of Bertelsmann U.S.A.—to head the largest public school system in the country. Under Mayor Michael Bloomberg, Klein is attempting to enact historic reform of the New York City schools, which have a $15 billion budget and 1.1 million students, many of whom live in poverty. Seeking to streamline an entrenched bureaucracy and a Board of Education prone to political paralysis, Bloomberg has established mayoral control over the schools. Klein, the son of a postman and himself a product of the city’s schools, calls this “a golden opportunity.”

As Klein sees it, to enact meaningful reform, in New York and elsewhere, there needs to be a profound shift among educators and political leaders from a culture of excuse to one of accountability. That can be achieved, he said, only by freeing school systems from the constraints of traditional union contracts and bureaucratic regulation. “If you think industry faces regulation, the whole educational system is run on the myth that we can figure out through a compliance-based model a way to manage ourselves into success,” he said. “If there was ever a set of dysfunctional incentives, it’s in public education.”

On the issue of teacher contracts, he outlined what he terms the “three pillars of mediocrity”: lockstep pay, seniority and tenure. “Think if you had to run your business with a work force on lockstep pay, seniority and life tenure,” Klein said. “The result of that is the most irrational set of human resource decisions you can imagine.” Even trying basic things like paying teachers more to work in shortage areas can trigger resistance, he said, because people aren’t used to the idea and therefore aren’t comfortable with it.

Given the failures of the nation’s schools, many companies have acted on their own to ensure they build quality work forces. Con Edison, the $10 billion utility that serves New York City and some surrounding suburbs, essentially built its own school, said Chief Executive Eugene McGrath. Each day 300 Con Ed employees attend classes in remedial math and reading and skills training at the “learning center,” as the company calls it. “It’s an enormous productivity issue—and also a cost to us to supplement the training that should be gotten in school,” McGrath said.

Joseph Cowan, CEO of Manugistics, a leading supply-chain management software provider based in Rockville, Md., said as much as 40 percent of his company’s work force was educated outside the U.S. “We’ve got the pressure that you shouldn’t go offshore,” he said, but at the same time American schools must provide “the product that we need to work with.”

Examples also abound of companies and business leaders getting actively involved in their cities’ public schools. As McGrath explained, hundreds of Con Ed workers volunteer as mentors in the New York City schools, particularly at a high school next to the company’s headquarters. Leonard Harlan, president of New York City-based Castle Harlan, a private merchant-banking firm, visited a high school in the South Bronx as part of the Principal for a Day program. He also has participated in a privately funded program called Chess in the Schools, which teaches elements of strategy and math through chess to 35,000 elementary and middle school pupils in poor neighborhood schools. “This is an example of how the business community can really get involved in a very creative way,” Harlan said.

In Detroit, where automakers and other manufacturers need a continuing stream of skilled workers, the business community started a K-8 public school a decade ago for troubled inner-city youth. The students wear uniforms and attend classes from 8 a.m. to 4 p.m., 11 months of the year, said J.T. Battenberg, CEO of Delphi, the large auto parts maker. Battenberg himself participates in the initiative, which now runs three schools. He said each child is assigned to a business leader who not only gives money to the program but also attends classes with the child four times a year to offer mentoring. “It’s been a short 10 years, but these 800 students now are in the top 10 percent of the scores in all the rankings and beat the private schools in Bloomfield Hills and Grosse Pointe,” Battenberg said.

The Push for Charter Schools
Of course, while such efforts make a positive impact in many students’ lives, they don’t get at the root of public education’s problems. To achieve systematic reform, several things must happen, said Klein. Instead of school systems being controlled by the “hydraulic of the bureaucracy,” individual schools and their principals “should be the strong point in the food chain,” he said. To this end, he has created a leadership academy to improve principal training. Headed by Jack Welch and funded by $75 million from the private sector, the academy draws on proven corporate as well as academic leadership models. Klein said the academy is attracting young, talented people—from within the system and from the outside—who believe in the current reforms and become effective “change agents.”

Another key approach to achieving systemic reform is the charter school movement. Thirty states, including New York, have legislation allowing charter schools, or independent and innovative public schools. Roughly one million children in the U.S. attend a charter school. By virtue of their independence, charter schools are union-free and performance-based, measuring student and staff outcomes, explained Mark Thimmig, CEO of White Hat Ventures, the nation’s fifth-largest charter school operator.

“We not only have a teacher bonus, but we have a building bonus,” said Thimmig, whose Ohio-based company educates 20,000 children in cities including Phoenix, Detroit and Colorado Springs and may soon launch a program to work with high school dropouts in New York. “And that building bonus goes right down to the janitor and to the people who work in the cafeteria, because part of what we’re trying to do is create a united team.”

How can CEOs help these efforts at fundamental education reform? As well as channeling their energy and resources into specific local programs, they need to become outspoken advocates for overall change, Klein and Thimmig said. The charter movement, in particular, encounters a great deal of resistance that chief executives might help overcome. “We have tremendous opposition from the unions,” said Thimmig, “and it must be the business community in large part that stands up and understands … that this has got to have the opportunity to move forward.”

Klein urged CEOs to lobby Washington on behalf of schools reform. Given the start of President Bush’s second term—and his vow to make education a signature issue—this is an opportune time. Yet when business leaders go to Washington, Klein said, their priorities tend to be issues such as health care and tort reform. “Education reform is not where the core of the business community is,” he said. If it were, he added, “I think it could have a big impact on the country.”

Specifically, Klein encouraged lobbying to eliminate state caps on the number of charter schools and to change categorical federal education spending to more incentive-based funding. He also called for allowing school districts more flexibility in hiring principals who come from other industries as opposed to from within the teaching ranks.

It’s important to keep in mind that the problems of public education aren’t intractable, said Thimmig. By not assuming that struggling students are stupid, and by changing their educational environment, you can achieve remarkable results, he said. “If you interviewed the kids in our schools, every single one of them would tell you that at some point they were told they were stupid, they were troublemakers, they were no good and they were worthless,” he said. “And these kids are smart and they’re bright.” Basic reforms, such as placing a social worker in every school to help students with emotional problems, can go a long way, he said.

Time Is of the Essence
William Brody, president of Johns Hopkins University, agreed. “The problem is not the kids, it’s the system,” he said. “And if you fix the system, you can make tremendous changes. But it takes a long-term commitment. The challenge is to do that when we have a political timeframe that’s relatively short.”

That’s precisely the challenge Klein and Bloomberg face in New York. Bloomberg is up for re-election in November. If he loses, many of their reform initiatives could be discarded by his successor. If Bloomberg wins, Klein believes support for their efforts will grow as people start to see more and more positive change in the schools. Political leaders and education experts across the country are watching to see what happens in New York, which could serve as a model for other urban school systems. Despite the high stakes and uncertain outcome, Klein, the antitrust lawyer-turned-CEO-turned-schools chancellor, remains confident. “I believe it’s doable,” he said.

America’s chief executives, worried about their current and future labor pool, certainly hope he’s right. “I have tremendous respect for what Joel’s trying to do, and I think it’s probably every bit as difficult as the auto industry,” said Delphi’s Battenberg. “It’s very analogous. But it has to be done, it will be done, it must be done. It’s going to take some time, but there are enough success stories that I think as long as people who are dedicated like Joel continue to focus on the problem, it can get done.”

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